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Posts Tagged ‘state asset sales’

Winston Peters recycles pledge to “buy back state assets” – where have we heard that before?

31 March 2014 1 comment

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Over the last two years (give or take), NZ First leader, Winston Peters, has stated on numerous occassions that buying back shares in the three energy SOEs (Meridian, Genesis, and Mighty River Power) will be a “bottom line” in any post-election coalition deal.

On 20 June 2012, NZ First posted this statement on their website,

New Zealand First will use its influence on the next coalition Government to buy back our state-owned power companies which are being flogged off by National.

Rt Hon Winston Peters says New Zealand First is committed to buying back the shares at no greater price than paid by the first purchaser.

“State-owned assets rightfully belong to all New Zealanders but National is intent on handing them over to rich foreign investors.

“It is simply lining the pockets of the wealthy by selling off well-performing assets that already provide the Government with extremely healthy dividends.”

Mr Peters says it is only fair to alert potential investors that New Zealand First’s intention to buy back the shares will be part of any coalition negotiations.

“As things stand now, the assets will end up in foreign ownership which is an outright attack on our sovereignty. We are committed to repelling that attack.”

The pledge was repeated on 29 November 2013;

New Zealand First is the only political party that has said since the beginning that if the Government did go ahead with this idiotic decision, then when we are in a position to influence the next Government, we would buy back the shares at a price no more than that initially paid for them.

On ‘The Nation‘, on 15/16 March, interviewed by Patrick Gower, Peters repeated NZ First policy that a share buy-back, at a cost no greater than the original purchase-price, was a bottom line policy for his Party;

Gower: So that means buying Genesis back?

Peters: That’s right. At no greater price than they paid for it.

Gower: And does that mean buying back the other power companies as well?

Peters: It means exactly that. That’s what our position has been for some time.

Gower: So that’s a priority for you in any negotiations?

Peters: It is a priority, and it also has the blessings in terms of economic calculations from Treasury.

Taken at face value, Peters’ committment to buy back shares in the powercos seems more comprehensive and radical than either the Greens or Labour. Neither have committed to buying back shares in Meridian, Genesis, and Mighty River Power until the government books allow it.

But, can Peters’ pledge be taken at face value?

Can he be trusted to make good on his word to (a) make a share buy-back a bottom-line in any coalition deal and (b) actually follow through?

His track record on such matters is not good.

On 27 September 1996,  the then-Bolger-led National government sold the Forestry Corporation of New Zealand Ltd cutting rights to a private  consortium (Fletcher Challenge Forests, 37.5%, Brierley Investments Ltd, 25%, and Chinese state-owned company,  Citifor Inc, 37.5%)

This became a major election issue in  the lead-up to the first MMP election in  1996, with the Alliance organising a CIR petition to halt the sale.

NZ First leader, Winston Peters, pledged to buy back the cutting rights, stating on several occasions that any government he was part of would “hand back the cheque“;

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The game plan - what we're all playing for - NZ First buy back forest corp

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During the election campaign, Peters stated unequivocally his intentions that the privatisation of Forestry Corp would not stand under any government he was part of;

“I want to tell the Chinese buyers and I want to tell Brierleys that they had better not make any long-range plans because the day after the election is over we will be sending them an emissary to them them exactly what is going to happen, that is, that we are going to keep out promise, they can give back the asset and we will give the money back.” – Winston Peters,  Otago Daily Times, 1 Feb 1997 (on pre-election statement/promise)

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http://fmacskasy2.files.wordpress.com/2013/07/otago-daily-times-1-february-1997-winston-peters-asset-sales-forestry-corp-buy-back-hand-back-the-cheque.jpg?w=605&h=729

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On 11 December 1996, Peters announced that he would be entering into a formal coalition arrangement with the National Party, to form the first MMP coalition government.

Subsequently, Peters’ pledge to “hand back the cheque” and buy back the forestry cutting rights, was ‘quietly’ dropped;

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NZ First ignored chance to implement own policy

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“… NZ First did not make any attempt to include  in the [Coalition] agreement its policy of placing a 24.9% limit on foreign ownership of strategic assets.

Neither did they raise the NZ First promise to buy-back Forestry Corp, which was sold earlier this year to a consortium including Fletcher Challenge.” - Otago Daily Times, 16 Dec 1996

As Treasurer and Deputy Prime Minister in the National-NZ First government, Peters had ample opportunity to implement his Party’s buy-back policy. It was a promise he could have kept. And should have kept.

Instead, NZ First opted to implement National’s policy of tax cuts on 1 July 1998. With even more tax cuts promised by then-Finance Minister, Bill Birch.

This was money that Peters could have allocated and spent of re-nationalising our forests – but was instead wasted on cutting taxes, thereby reducing the ability of the coalition government to implement a buy-back, as Winston Peters had promised.

If Peters holds the balance of power after 20 September, and if he forms a coalition with either bloc, he may well carry out his promise to buy back shares in our energy utilities.

Or then again, he might not.

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References

NZ First: NZ First Committed To Buying Back State-Owned Assets

NZ First: Our asset sales buyback promise – Radio Live Column

TV3: Winston Peters: Asset buy-back ‘a priority’

FAO.org:  Devolving Forest Ownership in New Zealand: Processes, Issues and Outcomes

Treasury: Income from State Asset Sales as at 30 September 1999

Wikipedia: CITIC Group [Citifor]

Wikipedia: Referendums in New Zealand

Otago Daily Times: Alliance quits quest for forestry petition

Otago Daily Times: NZ First ignored chance to implement own policy

Otago Daily Times: NZ First opts for National

Otago Daily Times: Further tax cuts unlikely before next century

NZPA: Birch pledges more tax cuts

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Be careful what you wish for - Key and Peters

Above image acknowledgment: Francis Owen

This blogpost was first published on The Daily Blog on 16 March 2014.

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Letter to the Editor: Why should I believe John Key?

25 February 2014 1 comment

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FROM:    "f.macskasy" <f.macskasy@clear.net.nz>
SUBJECT:  Letters to the editor
DATE:     Tue, 25 Feb 2014 08:33:27 +1300
TO:      "Sunday Star Times" <letters@star-times.co.nz> 

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The Editor
Sunday Star Times

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John Key's promise not to sell any other state assets should
National be re-elected should be treated with suspicion and
caution.

Key's track record in breaking promises and "bending the
truth" is now legendary, whether it be his promise not to
raise GST (which he did) or to strengthen the Emissions
Trading Scheme (which he watered down) or, in 2008, when he
campaigned on implementing food in schools - only to resist
introducing the programme later on.

Plus he has been less than honest in describing the GCSB
Bill as "not fit for purpose" and "vague" - when it was
crystal clear in stating that the Bureau could not spy on
New Zealanders and permanent residents.

Key habitually makes promises or statements of fact which
he breaks with flimsy excuses to justify his actions.

This is not a Prime Minister who can easily be taken at his
word.

-Frank Macskasy
(address and phone number supplied)

 

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FROM:   "f.macskasy" 
SUBJECT: Letters to the editor
DATE:    Tue, 25 Feb 2014 08:18:31 +1300
TO:     "NZ Herald" <letters@herald.co.nz> 

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The Editor
NZ Herald

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John Key's "reassurance" that his government has no further
plans to sell other state assets is simply not credible.

His reputation for "bending the truth" and broken promises
is now widespread. Who can forget his promise not to raise
GST - which he broke with flippant excuses.

Or his assertions that the GCSB Act  was "vague and unclear"
- when in fact it was crystal clear in stating that the
Bureau could not spy on New Zealand citizens and permanent
residents?

Or his reference in October 2011, to a mysterious Standard &
Poors email, claiming that the ratings agency would have
downgraded NZ if Labour had been in office? Standard and
Poors immediatly rejected they made any such statement.

I have no reason to take Mr Key at his word. His reputation
precedes him.

-Frank Macskasy
(address and phone number supplied)


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FROM:   "f.macskasy" 
SUBJECT: Letters to the editor
DATE:    Tue, 25 Feb 2014 07:58:42 +1300
TO:     "Dominion Post" <letters@dompost.co.nz> 
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The Editor
Dominion Post

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John Key has announced that his government will not sell any
other state assets should National be re-elected later this
year.

It is hard to believe a Prime Minister who has made so many
promises and statements which have either turned out not to
be true; a distortion of the truth; or outright mistruths.
His broken promises such as not raising GST and raising
wages to parity with Australia have all been broken.

There is an old saying, "Fool me once, shame on you. Fool me
twice, shame on me".

I prefer not to be fooled a second time.

I simply don't believe him.

-Frank Macskasy
(address and phone number supplied)

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References

NZ Herald: PM: no more SOEs to sell after Genesis

Radio NZ: No more asset sales? Cunliffe doesn’t believe it

 

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referendum election

Above image acknowledgment: Francis Owen

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“Moral mandates”, “mass medication”, and Mayors vs Ministers

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“Moral mandates”

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Nats look to 2014 governing options

Acknowledgement: Fairfax Media – Nats look to 2014 governing options

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What was that about “moral mandate”, Dear Leader?

Key said the largest party had the “moral mandate” to govern.

“If National was to go out there and poll 46 per cent or 47 per cent – very similar to the result in 2011 – and not form the Government I think there would be outrage in NZ.”

So Key now believes in large numbers and percentages?

Interesting.

Because he certainly paid no heed to the Will of the Electorate when the majority (up to 75% in some polls)  opposed partial privatisation of   State assets.

Nor did Key pay any attention to  the finer points of the results of the  2011 election.  The majority of Party Votes  went to  parties opposing  asset sales,

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National , ACT, United Future Party Votes Labour, Greens, NZ First, Maori Party, Mana, and Conservative Party votes

National – 1,058,636

Labour – 614,937

ACT – 23,889

Greens – 247,372

United Future – 13,443

NZ First – 147,544

Maori Party – 31,982

Mana – 24,168

Conservative Party* – 59,237

TOTAL – 1,095,968

Total – 1,125,240

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So even though the Conservative gained no seats in Parliament (*because of the 5% threshold),  they gained over double the electoral-support for ACT. The Conservative Party, it should be noted, opposed asset sales.

It certainly did not matter to Dear Leader on the issue of public opposition to asset sales. He was more than willing to ignore the majority of New Zealanders who opposed his privatisation agenda.

Key’s claim that “morally” he should lead the next government post-2014 because National may be the largest Party  in Parliament – he should remember one thing;  size doesn’t always count.

Key’s assertion  on having a so-called “moral mandate” to govern post-2014, is  obviously a  message directed at  Winston Peters.

His message to Peters  is simple – ‘if we’re the biggest party, then we are the rightful government. And we will push this meme in the public consciousness which will make life difficult for you if you don’t co-operate’.

This is the kind of deviousness which National’s party strategist (taxpayer funded, no doubt) has come up with, to ensure a third term for John Key.

It now falls upon Peters to see if he’ll cave to pressure from the Nats.

Other Blogs

The Standard:  Moral mandates

The Pundit:   On coming first, yet losing

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“Mass medication”

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Radio NZ logo - Jim Mora's 4-5 Panel Edwards Boag

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A curious event took place on Monday 1 July on Radio NZ’s Jim Mora’s panel…

His guests that afternon were left-wing, Labour supporter, Dr Brian Edwards and right wing, National supporter, Michelle Boag.

One of the topics of discussion was fluoridation of  urban water supplies. As is usual on issues like this, the debate became passionate.

But curiously, it was the position taken by each guest, Brian Edwards and Michelle Boag, that I found curious.

Usually, a left-winger will argue from a position of Collective action and responsibility. Like the issue of Food in Schools, the Lefts supports the stance that raising children, and ensuring their well-being, is a community responsibility.

The Right usually argues from a position of Individual choice  and responsibility. On the issue of Food in Schools, the Right reject any notion of collective responsibility and instead hold to  total parental responsibility as a default position.

I expected the same in the fluoridation debate between Brian and Michelle – only to find their positions reversed.

Brian was advocating from a Libertarian position of individual choice. He opposed flouridation.

Michelle was supporting the Collectivist position for a socialised benefit. She supported flouridation.

Their debate can be heard here:

Quicktime - Radio NZ - Jim Mora - 1 July 2013

Such complex creatures we humans are…

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Mayors vs Ministers

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Eqypt is not the only country wracked with coup d’états.

On  30th March 2010, National seized control of Environment Canterbury, postponing elections, and three weeks later appointing seven, un-elected Commissioners to run the body. The new Commissioners  were vested with new powers to  implement regional plans for Canterbury that could not appealed to the Environment Court (except to the High Court on points of law).

Roger Young, a trustee of the Water Rights Trust,  suggested one of the prime movers for central government seizing control of ECAN was the vexed problem of water rights in the Canterbury region,

After the commissioners’ own recommendations for a mixed member governance model at ECan post-2013 were ignored by the government, we see ECan now as simply a puppet to the bidding of a government which appears determined to increase irrigation and intensive farming in Canterbury despite the first order priorities in the Canterbury Water Management Strategy.

The slow pace of change behind the farm gate means that we will still have rising stocks of dirty water at a level that will haunt Cantabrians for decades.”

Acknowledgement: NBR – ECan ‘just a puppet to government bidding

The Canterbury Central Plains Water project is a half-billion dollar project, and National Ministers wanted to ensure that the money was spent according to their agenda. As we all know, farmers tend to vote National.

Three years later, and National has extended it’s power in the Canterbury region  “to oversee the Council’s consents department”. We are told that this was by invitation by the CCC.  I am reminded of puppet regimes that, once installed by a Super Power (former-USSR, US, China, etc) , duly “invited” their sponsor to send troops to help prop up the proxy government.

Was the Christchurch City Council “persuaded” by Gerry Brownlee to  “invite the Minister for Local Government, Chris Tremain, to put in place a Crown Manager to oversee the Council’s consents department“? Were there back-room dealings where Mayor Bob Parker was issued an ultimatum by Brownlee;

‘Invite us to take over; save face; and save your arse at the up-coming local body elections – or we’ll take over anyway; you have egg on your face; and Lianne Dalziel takes over as Mayor in October – Your call.’

Is that the discrete conversation that took place between Bob Parker and Gerry Brownlee?

I suspect so.

Central Government: 2

Local Government: nil

Another recent announcement had John Key confirming central government’s support for Auckland Council’s rail loop and other transport plans.

Len Brown was, understandably, ecstatic. Christmas has come early for the Auckland Mayor,

I am delighted the government has agreed to support this project

I want to acknowledge Aucklanders for being very clear in their support for this project.”

However, the Nats are not ones to offer something without expecting something else in return,

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City's shares eyed for rail

Acknowledgement: NZ Herald – City’s shares eyed for rail

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So central government will pay up a few billion bucks to upgrade Auckland’s transport system – but the Nats expect Auckland City to privatise their community owned assets?

Cheeky buggers.

Draw: 1 all

When it comes to Nanny State, National out-performs the previous Labour government in spades. Labour hardly ever engaged to this degree of interference in local government affairs.  Executive power under National is growing, and impacting more on our lives.

With National intending to increase the powers of the GCSB and force telecommunications companies to store and hand over data to police and the spy agencies, the state’s influence in our lives grows day by day.

By comparison, Labour was practically a hands-off, “libertarian” style government.

This blogpost was first published on The Daily Blog on 5 July 2013.

 

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References

Sharechat.co.nz:  Environment Canterbury elections cancelled as commissioners appointed (30 Match 2010)

Fairfax Media: Environment Canterbury commissioners named (22 April 2010)

Ministry for Primary Industries:  Government funding for Central Plains Water Irrigation (18 Feb 2013)

NBR: ECan ‘just a puppet to government bidding’ (14 March 2013)

Interest.co.nz:  Auckland Mayor celebrates Government’s agreement to support rail loop (26 June 2013)

NZ Herald:  City’s shares eyed for rail (1 July 2013)

Interest.co.nz: PM Key says IANZ decision to strip Christchurch Council of consenting power is ‘unprecedented’ (1 July 2013)

Christchurch City Council:  Council to invite Crown Manager to oversee consenting  (3 July 2013)

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The Politics of Power and a Very Clear Choice – Part Wha

new zealand high electricity prices

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Continued from: The Politics of Power and a Very Clear Choice – Part Toru

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First NZ

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As Chris Trotter pointed out in his excellent blogpost just recently,

ONLY STEVEN JOYCE could offer up JB Were, Woodward Partners, Milford Asset Management, First NZ Capital,  and Forsyth Barr as credible critics of the Labour-Greens’ energy policy. As if these six financial institutions were ever likely to offer the Opposition parties their fulsome support!.”

Acknowledgement: The Daily Blog – No Dog In The Fight: Whatever happened To Academic Expertise?

We can add to the above list; AMP Capital, Morningstar Research, BusinessNZ, and Federated Farmers – all of which appear to be the front-line foot-mercenary-soldiers in National’s counter-attack to the Labour-Green’s NZ Power.

Minister of the Known Universe, Steven Joyce’s actual comment was,

Financial analysts including JB Were, Woodward Partners, Milford Asset Management, First NZ Capital, Devon Funds Management and Forsyth Barr are unanimous in their condemnation. One has labelled it a ‘hand grenade’ to the New Zealand economy, while others have said it will cut the value of every New Zealanders’ KiwiSaver account and lead to rolling blackouts. ”

Acknowledgement: Scoop –  Labour-Greens Power ‘Plan’ Economic Sabotage

Rolling blackouts“?!

He left out a plague of locusts and rivers turning into blood (though with farm run-offs, these days it’s more like Rivers of  Excrement).

We’ve had power black-outs in the past, due to dry weather; equipment failure; shut-downs for maintenance; human error; etc. And we will continue to have unavoidable power cuts, in the future;

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Damaging gales forecast for north 5.5.2013

Acknowledgement: NZ Radio – Damaging gales forecast for north

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Joyce added,

Kiwis are deeply suspicious about the Labour-Greens announcement and its timing. It’s simply economic sabotage. ”

Hmmm, considering the high value of the New Zealand dollar’s destructive effects on our manufacturing/export sector and the 40,000 jobs that’s been lost in the last four years – if I were Joyce, I would not be too keen to bandy about charges of “economic sabotage”. National’s policies in the last few years have been more than effective in that regard,

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Exporters tell inquiry of threat from high dollar

Acknowledgement: Radio NZ – Exporters tell inquiry of threat from high dollar

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It’s hardly surprising that most of the negative response has been from the financial markets and commercial firms. They are the ones with the naked vested interests.

To date, the following fear-threats have been thrown at the New Zealand public – because make no mistake, these  doomsday scenarios are directed at voters, and not Labour or the Greens.

Perhaps the most outrageous claims – or outright lies – came from share broking company, First NZ,

“Despite the alleged “excessive price increase in the 13 years since 2000 we are not convinced the system is broken. If it isn’t, then it doesn’t need fixing.

Since 2008, the “real” rate of increase (net of line charges) has slowed even further to 0.5 per cent per annum. Your writer knows for a fact he is paying less for electricity today than three years ago.

Our modelling assumes 11.6 per cent residential tariff increases over the next four years, however net of line charges this reduces to 3.2 per cent over four years.

We believe the Opposition’s desire for a 10 per cent reduction in power prices can mostly be achieved through the current market without the need for a complex and costly change of market structure.”

Acknowledgement:  NZ Herald –  Power price cuts coming anyway, says First NZ

In another document, First NZ made the extraordinary claim,

“Despite the alleged “excessive” price increases in the 13 years since 2000 we are not convinced the system is broken. We estimate that, net of line charges and after allowing for inflation, residential electricity prices have risen 2.6% since 2000.

Acknowledgement:  First NZ – Contact Energy – If it ain’t broke don’t fix it

Hold on.

Is First NZ is really telling the public that power prices have only risen 2.6% since  2000?!?! Well, they do qualify that with “net of line charges and after allowing for inflation”. Though why they would omit line charges seems pointless; the public are still paying at the end.  “Clipping the ticket” seems the norm and impacts on the end-consumer regardless of how it is done.

Which also raises a question in my mind;  why is First NZ making this assertion only now? Why did they not make the effort to rebut National’s claims when Dear Leader issued public statements like this, on 27 January, 2011,

“In the nine years Labour was in government, power prices went up 72 per cent and the Government owned 100 per cent of the assets.”

Acknowledgement:  NZ Herald – Power price fears if Govt stakes go

Why did First NZ not issue public statements ‘correcting’ National’s “misrepresentations” at the time?

Why have they left it only till now, to counter the assertion that “power prices went up 72%”?

Why is a single-buyer desk for electricity sending brokerage firms into a panic? Especially, considering, that we already have single buyer-desk’s in the form of Fonterra, Zespri, PHARMAC, etc.

The answer, I submit, is fairly obvious. First NZ’s fanciful statements and assertions are part of an orchestrated litany of bullshit to scare Joe & Jane Public to run back into the cold, dead arms of Nanny Neoliberal.

The Financial Money Men, with their Federated Farmers allies, are propping up their neo-liberal stooges in Parliament. The rats are out of the woodwork, and we can see who is lined up against the best interests of the public.

Because, in the final analysis, this all boils down to money – who makes it and who gets to keep it. And because so much money is at stake, we are told that rising power bills is the price for living in a “free” market.

We’re also promised that power prices will drop. Sometime. In the future.

We just have to be patient.

Maybe another thirty years?

It will be interesting if people buy into this propaganda BS.  Will voters believe the fear-mongering campaign from the money-pushers?

Or will they realise that share brokers and merchant bankers are  interested only in seeing that power prices remain at stratospheric levels, to provide maximum returns for their shareholders?

Because one thing is as certain as the sun rising tomorrow; these firms are not remotely interested in our welfare. Nor in the welfare of Kiwi families being gouged with higher and higher power bills.

I’m struck senseless that so many National supporters believe  that siding with the likes of JB Were, Woodward Partners, Milford Asset Management, First NZ Capital, Devon Funds Management,  Forsyth Barr, Business NZ, Federated Farmers, et al, will somehow gain them some kind of  ‘benefit’. Are National supporters so masochistic and blinded by their faith in the “free market” that they are willing to tolerate  paying higher and higher prices for electricity?

I hope they realise that JB Were, Woodward Partners, Milford Asset Management, First NZ Capital, Devon Funds Management,  Forsyth Barr, Business NZ, Federated Farmers, et al, will not pay the power bills for National supporters.

Good luck with that!

The Labour-Green coalition should welcome these attacks as an opportunity. Every time one of these money-pushing firms launches a critical attack on NZ Power – the Labour-Greens should counter with press conferences where facts, stats,   and more details are presented for the public and nice, big, colourful  graphic-charts presented.

Like this one, from the Ministry of Economic Development/Business, Innovation, and Employment;

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Ministry of Economic Development - Power Prices 1974 - 2011

Acknowledgement: Ministry of Economic Development/Business, Innovation, and Employment – Power Prices

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(Note price drop around 1999. Whilst Industrial and Commercial prices fell, residential prices continued to rise. There is more to explain the 1998/99 price fall here;  Statistic NZ –  Electricity consumption. It had little to do with Bradford’s reforms, and more to do with competing retailers changing their  methods of calculation for the CPI electricity price index and building extra generation capacity. The cost of the latter had shifted from the State and onto domestic consumers.)

Where possible, David Parker and Russell Norman should  speak at engagements around the country at public meetings. (Community newspapers and other local media should be engaged, as they love anything that happens within their community.)

Invite others such as  the Salvation Army, and experts such as energy-sector expert, Molly Melhuish, and Victoria University researcher Geoff Bertram, should be invited to address media events.

Invite members of the public; families, etc,  to present their power bills as evidence of skyrocketing prices.

Build a Broad Front of support. Show the country that there is support for NZ Power.

People want reassurance. We need to give it to them. And we need to show them why the National and the  finance sector are working in cahoots.

Because ain’t it funny that no community organisation has come out, demanding that the electricity sector remain unregulated and welcoming higher and higher prices?

And if the media aren’t presenting the full story, use progressive blogs to publish the information. We, too, can be  “foot soldiers” in this struggle. (Because surprise, surprise,  we too, use electricity.)

This is a war between the Neo Liberal Establishment and Progressive forces fighting to roll back thirty years of  a failed experiment.

That war began on 18 April.

There is no reason on Earth why we should not win.

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NZ First

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I find it hard to trust  NZ First. Or, to be more precise; I find it hard to trust it’s leader, Winston Peters.

His parliamentary colleagues; party members; and supporters – I have no problem with. They are people who, generally, want the best for this country and dislike the false religion of neo-liberalism as deeply as those on the Left do.

But Peters…

Peters has ‘form’. He has changed direction  on numerous occassions, and I find it hard to take him at his word.

Some examples…

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In 1996, Winston Peters campaigned to defeat the National Government and remove it from power. His campaign statements at that time seemed unequivocal;

Jim Anderton: Is the member going into a coalition with National?

Winston Peters: Oh no we are not.” – Parliamentary Hansards, P14147, 20 August 1996

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There is only one party that can beat National in this election that that is New Zealand First.” – Winston Peters, 69 & 85 minutes into First Holmes Leaders Debate, TVNZ, 10 September 1996

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Of course I am not keen on National. Who is?

… This is a government bereft of economic and social performance  [so] that they are now arguing for stability.” – Winston Peters, Evening Post, 25 June 1996

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The prospects are that National will not win this election, that they will not form part of any post-election coalition.” – Winston Peters, The Dominion, 5 October 1996

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It is clear that this National government will use every means at its disposal to secure power… Come October 12…  Two months ago I warned that the National Party would use every trick and device at their command to to retain their Treasury seats.” – Winston Peters speech to Invercargill Grey Power, 26 August 1996

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The Prime Minister [Jim Bolger] is not fit for the job and come 12 October he will be out. He should not get on his phone and call me like he did last time, because we are not interested in political, quisling  behaviour. We are not into State treachery.” – Winston Peters, Parliamentary Hansards, P14146, 20 August 1996

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We believe the kind of politician depicted by Bolger, Birch, and Shipley is not to be promoted into Cabinet. As a consequence we will not have any truck with these three people.” – Winston Peters, NZ Herald, 22 July 1996

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We are a party that says what we mean and mean what we say, regardless of the political consequences.” – Winston Peters, Speech to public meeting, 9 October 1996

Despite Peters’ assurances,  on  11 December 1996  the public woke up to this nightmare,

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In 1996, one of the biggest election issues was the sale of  Forestry Corporation of New Zealand Ltd (cutting rights only,  not the land). In 1996, the then Bolger-led National government had announced it’s intention to privatise the SOE,

In 1996, the Minister of Finance announced the government’s intention to sell its shares in the Forestry Corporation of New Zealand (formerly Timberlands Bay of Plenty). The corporation’s assets were Crown Forestry Licences to planted forests, which had expanded to 188 000 ha in the central region of North Island, processing plants in various locations, a nursery and a seed orchard.

A handful of large forestry companies and consortia submitted bids. The sole criterion was price. However, as the strength of the bids was not as great as hoped, bidders were asked to resubmit their bids. In August 1996, it was announced that the Forestry Corporation of New Zealand had been sold to a consortium led by Fletcher Challenge in a deal that valued the assets at $NZ 2 026 million.

Acknowledgement:  Devolving forest ownership through privatization in New Zealand

The sale went ahead and the  final sale-price was $1,600,000, to a consortium made up of  Fletcher Challenge Forests (37.5%), Brierley Investments Ltd (25%) and Citifor Inc (37.5%).

Acknowledgement:  Treasury – Income from State Asset Sales as at 30 September 1999

Throughout 1996, Winston Peters engaged in an election campaign to “hand back the cheque” should he and his Party be elected into a position of power,

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Forests Buy back signalled - Evening Post - 13 August 1996

Acknowledgement: (hard copy only): Evening Post, 13 August 1996

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the Game plan - what we're all playing for - Eveni ng Post - 2 October 1996

Acknowledgement: (hard copy only): Evening Post, 2 October 1996

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To quote  Peters, who said on 13 August 1996,

I ask both the Labour and Alliance parties – putting politics aside for  this one day – to join New Zealand First in it’s post-election pledge to reverse the sales process“.

As many who lived through the times will recall, Peters pledged to “hand back the cheque”. It was a powerful message.

But it never happened.

Peters joined in coalition with National  (consigning Labour and The Alliance into Opposition) and the pledge to buy back the forests was dropped – much to the disgust of people at the time..

Sixteen years later, and Peters has made the same promise all over again.  On TV3′s The Nation, on 24 June 2012,  Winston Peters stated,

 “The market needs to know that Winston Peters and a future government is going to take back  those assets. By that I mean pay no greater price than their first offering price. This is, if they transfer to seven or eight people, it doesn’t matter, we’ll pay the first price or less. ”

Acknowledgement: TV 3 – The Nation

On 4 March this year (2013), Peters announced,

New Zealand First will use its influence on the next coalition Government to buy back our state-owned power companies which are being flogged off by National and we are committed to buying back the shares at no greater price than paid by the first purchaser.”

Acknowledgement: Scoop – One More Quisling Moment from Key

Another quote from Winston Peters, who  said in a speech to the NZ First Conference,  in 1999,

All the policies and manifestos in the world are meaningless when you cannot trust the leadership. That is what leadership is about – trust. Nobody expects leadership to be infallible. But you have a right to expect it to be trustworthy.”

Acknowledgement: (hard copy only):  Speech by Rt Hon Winston Peters to the New Zealand First Conference, 18 July 1999, at the Eden Park Conference Centre

Indeed; “All the policies and manifestos in the world are meaningless when you cannot trust the leadership.”

If Peters and NZ First hold the balance of power in 2014 and choose to enter into a coalition arrangement with National – will he carry out his pledge this time?

Or will that promise be dropped and buried for political expediency and some babbled, weak excuse?

It’s happened once, before. And not too long ago.

Can he be trusted for a second time?

I am of  the belief that folks can learn from their mistakes. God knows I’m made a few in my early adulthood.

Has Winston Peters learned to honour his electoral pledges and not to treat the voting public as fools? Has he learned that he betrays voters at his peril? I hope so.

Because the public exacted a fitting response to his behaviour in 2008, as he and his Party were punished and spent three years in the political wilderness (see;  New Zealand general election, 2008).

More than ever, the future of this country – and the power –  is in our hands,

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NZ Power Shearer Norman

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Residents Vote In Mana By-Election

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Don’t screw up this time, Mr Peters.

This blogpost was first published on The Daily Blog on 6 May 2013.

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*

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Previous Related Blogposts

History Lesson – Tahi – Electricity Sector “reforms”  (4 March 2012)

John Key: Man of Many Principles (28 Sept 2012)

Labour, Greens, NZ First, & Mana – A Bright Idea with electricity! (10 March 2013)

Additional Sources

Statistics New Zealand: The history of electricity reform

Ministry of Economic Development: Electricity Prices

NZ History Online:  Dancing Cossacks political TV ad

The Treasury: Income from State Asset Sales as at 30 September 1999

References

NZPA: Splitting up ECNZ expected to cut wholesale power price (16 Dec 1998)

NZPA:  Reforms aimed at business – Luxton (21 April 1999)

Otago Daily Times: Power Prices Set To Soar (12 May 1999)

Otago Daily Times: No case for regulation (24 May 1999)

Otago Daily Times: Lower power prices coming says Bradford (3 June 1999)

Otago Daily Times: Power prices to rise by up to 15.1% (29 June 1999)

Otago Daily Times:  Reforms blamed for hike (13 July 1999)

Scoop: Alliance to hold Winston Peters accountable (8 Oct 1999)

NZ Herald: Peters ‘forgets’ NZ First support for power reforms (13 Aug 2008)

Fairfax: Government to seek inquiry into power price rise  (30 September 2008)

NZ Herald:  Put prices on hold, Brownlee tells power companies (21  May 2009)

NZ Herald: Mighty River directors’ 73pc pay rise realistic – Key (5 April 2013)

Scoop:  Labour-Greens to rip up the book on electricity pricing (18 April 2013)

NZ Herald:  Labour-Greens plan could work, says Vector CEO (19 April 2013)

NZ Herald:  National gobsmacked at Labour idea (19 April 2013)

NZ Herald: Power plan likened to Soviet era (19 April 2013)

NZ Herald: MRP chief slams socialist’ plan (21 April 2013)

TVNZ:  Q+A – Transcript of Steven Joyce interview (21 April 2013)

NZ Herald:  Bernard Hickey: Power barons fail to fool the public this time around (21 April 2013)

Radio NZ: Power prices nearly double since 2000 (21 April 2013)

Other blogs

Kiwiblog: Electricity Prices

Tumeke: MANA threaten overseas investors not to buy assets – Bloomberg pick up on the story

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The Politics of Power and a Very Clear Choice – Part Toru

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new zealand high electricity prices

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Continued from: The Politics of Power and a Very Clear Choice – Part Rua

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On a more Positive Note

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With all the scare-mongering from some quarters (National, right wing blogs, conservative media commentators), and naked threats of economic sabotage (JB Weir, Brian Gaynor, etc), there have been commentators with a more positive, up-beat assessment of the Green-Labour proposal for NZ Power.

Bernard Hickey wrote,

“But sometimes the sheer size of the profits becomes so obvious that it invites a backlash. The National Government realised the power-consuming public was nearing the end of its tether in 2008, so it acted to force more competition with its 2009 sector review and the very successful “Whatsmynumber”. It helped increase the switching rate over the past couple of years towards 20 per cent. Annual residential power price inflation halved from 8 per cent in the decade from 1998 to 2008 to 4 per cent since then.

But it is still running at quadruple the general inflation rate and it’s clear that “competition” hasn’t worked to reduce or even restrain power prices for voters, as opposed to businesses.

[...]

The SOE sales programme changed all that. It proposed handing those super profits to the richest New Zealanders in the form of shares and dividends.

That was the moment the Government and the industry crossed that red line and triggered the regulatory backlash promised this week by Labour and the Greens.”

Acknowledgement:  NZ Herald – Bernard Hickey: Power barons fail to fool the public this time around

Vector chief executive, Simon Mackenzie, seemed to agree,

The electricity policy announced by the Labour and Green parties could be made to work and the current debate is overly emotive, says the chief executive of the regulated monopoly electricity and gas network owner, Vector.

Simon Mackenzie told BusinessDesk he was encouraged by the fact the proposed central purchaser system would incentivise commercially rational investment in energy efficiency, and that the Opposition parties were not pursuing direct subsidies.

He also welcomed the fact Labour was proposing to simplify regulation of lines companies, which has become enmeshed in the courts after policies Labour implemented was “not tracking as was intended,” Mackenzie said.

There was “no perfect model” for electricity systems, and other countries used similar methods to set prices and to procure investment in new power plants as demand rises. At present, new generation is procured by competing generators identifying the “next least-cost” of new generation and deciding to build it.

[...]

“The model is used in other jurisdictions. It has its pros and cons. It’s made to work.”

Acknowledgement:  NZ Herald – Labour-Greens plan could work, says Vector CEO

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Inevitable Conclusions

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1. The term “Government-in-Waiting” is well known.

But there is a corollary to this concept.

The Green-Labour policy has not only put National on the “back foot” with the audacious nature of the plan – but has placed National Ministers – from John Key up – into a ‘No Man’s Land’ of a Government-in-Opposition role.

National finds itself faced with a policy that is so novel; so unforeseen; that their initial reactions were indignant splutterings of “North Korean school of politics”; candles; brown-outs; “United Soviet Socialist Republic of New Zealand” [sic]; threats of economic collapse; economic “sabotage”, and other doomsday scenarios.

The responses could be likened to the indignant temper-tantrums of a teenager who has been used to getting things all his/her life – and was suddenly being brought to heel by exasperated parents.

Key has said he never wants to be in Opposition again,

“I don’t think it suits me as a person. I’m not a negative person and a lot of Opposition is negative.”

Acknowledgement: NZ Herald – Key says he’ll quit politics if National loses election

Well, that is precisely where he now finds himself: the new quasi-Opposition in Parliament. The Green-Labour coalition is setting the agenda, and National can only react,

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Labour-Greens plan forces government to suspend MightyRiverPower offer, amend documents

Acknowledgement:  Sharechat – Labour-Greens plan forces government to suspend MightyRiverPower offer, amend documents

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2. On 20 April,  Labour finance spokesperson, David Parker, told  TV3′s The Nation,

It’s not like the money disappears from the economy, just that people have more money in their pockets. Instead of spending it on inflated power prices, they’re spending it somewhere else in the economy.”

Which is pretty much the rationale that National used to justify it’s fiscally irresponsible tax cuts in 2009 and 2010,

“In the short term, National’s tax package will give households confidence and some cash in their back pockets to keep the economy going and to pay down debt.”

Acknowledgement: National – Economy/Tax Policy

3. If New Zealanders could tick National in 2008 for their promised tax cuts (in 2009 and 2010, despite being unaffordable and demanding massive borrowings to fund) – then I’m sure as hell confident they’ll be ticking Labour and/or Green in 2014 (if not earlier) for cheaper electricity.

There is nothing as easy to sell to voters than giving them what was theirs in the first place. That applies equally, whether tax dollars or electricity.

Unlike the academic nature of who owns our State Assets – which for the poor underclasses means very little – everyone can understand a very simple concept of cheaper power.

Consider if those 800,000 missing-in-action,  non-voters were asked the simple question; do you want cheaper electricity?

If the answer is “yes” – they need only tick the box for Labour and/or Greens.

For the Nats: game over.

Continued at: The Politics of Power and a Very Clear Choice – Part Wha

This blogpost was first published on The Daily Blog on 26 April 2013.

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*

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Previous Related Blogposts

History Lesson – Tahi – Electricity Sector “reforms”  (4 March 2012)

John Key: Man of Many Principles (28 Sept 2012)

Labour, Greens, NZ First, & Mana – A Bright Idea with electricity! (10 March 2013)

References

NZ History Online:  Dancing Cossacks political TV ad

NZPA: Splitting up ECNZ expected to cut wholesale power price (16 Dec 1998)

NZPA:  Reforms aimed at business – Luxton (21 April 1999)

Otago Daily Times: Power Prices Set To Soar (12 May 1999)

Otago Daily Times: No case for regulation (24 May 1999)

Otago Daily Times: Lower power prices coming says Bradford (3 June 1999)

Otago Daily Times: Power prices to rise by up to 15.1% (29 June 1999)

Otago Daily Times:  Reforms blamed for hike (13 July 1999)

Scoop: Alliance to hold Winston Peters accountable (8 Oct 1999)

NZ Herald: Peters ‘forgets’ NZ First support for power reforms (13 Aug 2008)

Fairfax: Government to seek inquiry into power price rise  (30 September 2008)

NZ Herald:  Put prices on hold, Brownlee tells power companies (21  May 2009)

NZ Herald: Mighty River directors’ 73pc pay rise realistic – Key (5 April 2013)

Scoop:  Labour-Greens to rip up the book on electricity pricing (18 April 2013)

NZ Herald:  Labour-Greens plan could work, says Vector CEO (19 April 2013)

NZ Herald:  National gobsmacked at Labour idea (19 April 2013)

NZ Herald: Power plan likened to Soviet era (19 April 2013)

NZ Herald: MRP chief slams socialist’ plan (21 April 2013)

TVNZ:  Q+A – Transcript of Steven Joyce interview (21 April 2013)

NZ Herald:  Bernard Hickey: Power barons fail to fool the public this time around (21 April 2013)

Radio NZ: Power prices nearly double since 2000 (21 April 2013)

Other blogs

Robert Guyton: Murray Kerr on MRP

Kiwiblog: Electricity Prices

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The Politics of Power and a Very Clear Choice – Part Rua

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new zealand high electricity prices

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Continued from: The Politics of Power and a Very Clear Choice – Part Tahi

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Evidently, the sky will fall if New Zealand proceeds with Labour-Green’s NZ Power proposal…

The four Donkeys of the Fiscal Apocalypse

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  1. Lack of New Infra-structure – The argument goes that without massive profits, state owned powercos will not have sufficient funds to pay for new power production or to maintain transmission lines. Really?! In which case, how on earth did we ever build up this country’s energy infra-struction in the first place???
  2. Brown Outs – We’ve been told we’ll have brown outs (see Collin’s Tweet above).  Really?! It beggars belief how we ever got out of bed in the mornings and tied our shoelaces, prior to to introduction of neo-liberalism. What a hopeless lot we must’ve been.
  3. Share Falls – Yes, the sharemarket will fall if  the NZ Power propopsal goes ahead. In fact, they’ve already dropped (see:  Power shares keep falling). So what people like Nick Lewis, an analyst at Wellington-based brokers Woodward Partners, is telling us is that the sharemarket is dependent on the New Zealand public held to ransom by way of exorbitant power pricing? We’re subsiding the sharemarket?  I wonder what reaction the share market might have if competition really worked, and drove down power prices???
  4. Investors abandoning NZ – Yes, for a while, the jittery bastards at Boston, Beijing, or Berlin  might panic and withdraw investment funds. For about half-a-f*****g second. Then they will get over themselves and return to invest elsewhere in our economy. Such as green technology in power production – technology which can be exported overseas for a tidy profit.

The fear-mongering from National, business, conservative media commentators, and other assorted right-wing nutjobs, assumes that New Zealanders are little children who are easily frightened by shadows.

We are not (much).

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Max Bradford and That ‘Dip’

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After Bradford’s reforms, power prices went north, skyrocketing by a jaw-dropping 87%  since 2000. If food had increased that much since 2000, there’d be wide-spread starvation in this country. And wide-spread rioting that would make the 2010 London riots pale by comparison.

Bradford, though, has insisted that his “reforms” would have worked, had the new  Labour government not ‘tinkered’ with them in the early 2000s. On TV3′s “The Nation“, on 21 April, Bradford stated,

“When the competive market was allowed to work, prices fell. And, ah, between 1998 and 2002, before Labour started fiddling with the market, prices did fall. So if you let the competitive market work,  then prices will either rise more slowly than  otherise they would, or  they fall. ”

Acknowledgement:  TV3 – The Nation

On Kiwiblog, David Farrar kindly provided a graph, attempting to support  Bradford’s claims,

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Electricity-Prices-1982-2012 - ex kiwiblog

Acknowledgement:  Kiwiblog/Stats NZ

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The graph is even helpfully marked with a black line and labelled “Bradford Reforms”, between 1997 and 1998.

Unfortunately, this in itself is not quite correct.  Despite Bradford’s Electricity Industry Reform Act 1998  taking effect in mid-1998,  the electricity sector  reforms did not fully take effect until April 1999, when Contact Energy was privatised and ECNZ was split in three; Mighty River Power, Meridian, and Genesis.

In the same year – 1999 – power prices surged (see:  Power prices to rise by up to 15.1%, see; Reforms blamed for hike), as Farrar’s own graph shows  with crystal clarity.

But then, curiously, there is a considerable dip in 2000 and 2001, followed by  a sharp, massive series of rises thereafter.

So, what happened in 2000 and 2001?

The Asian Crisis is what happened, folks.

As then-governor of the RBNZ, Don Brash reported,

“In July 1997 the Thai baht fell sharply, triggering a period of turbulence in the financial markets of East Asia. Many currencies declined p re c i p i t o u s l y, along with share markets and real estate prices.

The banking sectors of the countries most affected were severely damaged, and real economic activity fell, in some cases sharply, for the first time in decades. The direct effect on the New Zealand economy was adverse and substantial, and looks likely to continue for some time. The indirect effect, through business and household sector confidence, was also significant. The impact of the Asian situation reduced inflationary p re s s u res in New Zealand markedly.

[...]

Inflationary pressures had been slowing for some time previously, so that as far back as December 1996 monetary policy began to ease in response. Then late in 1997 and into 1998 the Asian financial crisis added to the slow-down, as growth prospects in many Asian economies, including Japan, deteriorated (see box 2). In December 1997, when easing monetary policy further, the Bank cited the likely impact of the Asian crisis on the New Zealand economy, and noted that the disinflationary impact of that crisis could become markedly worse. During 1998, this happened, and in response monetary policy was eased more aggressively still.

[...]

For New Zealand, reduced exports to the region, which previously accounted for 36% of our merchandise exports, had a negative impact on economic activity. The likely effects of the crisis were a particular focus in each of the Bank’s quarterly Monetary Policy Statements from December 1997 onwards. In the Reserve Bank’s March 1998 projections, we judged that the severity of the crisis was being underestimated by many observers. As a result the Reserve Bank eased monetary policy by more than New Zealand markets had expected.”

Acknowledgement:  – Don Brash, Reserve Bank of New Zealand Annual Report 1997-1998

Here is the NZ Reserve Bank chart of economic growth, measuring Real Gross Domestic  Product (GDP), from 1990 to 2012,

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reserve bank of nz real gross domestic product 1990_2012

Reserve Bank of New Zealand – Real Gross Domestic  Product, 8 January 2013

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Note  the RBNZ statement, from the above  January 2013 report,

Following the 1998 “Asian crisis” New Zealand’s Gross Domestic Product (“GDP”) recovered strongly. Annual GDP growth from 2001 through to 2004 (on average) exceeded that of its major trading partners, partly as a result of strong net inward migration and associated population growth.

 

Acknowledgement: IBID

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Now let’s compare the period from 1997 to 2002, on both graphs,

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RBNZ - GDP - electricity prices

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A closer look at the 1997 – 2002 period,

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NZ GDP annual growth rate Jan 1997 - Jan 2002

Acknowledgement: Trading Economics/Stats NZ – New Zealand GDP Growth Rate

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Aside from a “dead cat” bounce in the Third Quarter of 1999, the  correlation between economic activity and power prices is self-evident. The drop in electricity prices in 2000 and 2001 followed a slump in economic activity in Asia, and it’s subsequent global flow-on effects.

As PBS Frontline reported,

The Asian financial crisis that was triggered in July 1997 was a shocker. Even two years after it ended, anxiety still loomed over global financial markets. What was at the time perceived to be a localized currency and financial crisis in Thailand, soon spread to other Southeast Asian countries–including Malaysia, Indonesia and the Philippines.

By the fall of 1997, the contagion extended its reach to South Korea, Hong Kong and China.  A global financial meltdown had been ignited. In 1998, Russia and Brazil saw their economies enter a free-fall, and international stock markets, from New York to Tokyo, hit record lows as investors’ confidence was shaken by the volatility and unpredictability in the world’s financial markets.

Acknowledgement: PBS – Timeline of the Crash

As the Reserve Bank stated above, “annual GDP growth from 2001 through to 2004 (on average) exceeded that of its major trading partners” – and 2001 is when power prices started to rise again.

Also worthy of attention is  that the electricity CPI also drops in 2009 and 2011, during the latest Global Financial Crisis and resulting Great Recession.

Unfortunately, for reasons of their own (but which we can guess at), Mr Farrar and his National Party friends fail to point out this salient fact. The Right will mis-represent facts and re-write history to suit their own  narrowly-defined ideological agenda.

Labour-Green’s NZ Power is a threat to that ideologically-based agenda.

Continued at: The Politics of Power and a Very Clear Choice – Part Toru

This blogpost was first published on The Daily Blog on 25 April 2013.

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Previous Related Blogposts

History Lesson – Tahi – Electricity Sector “reforms”  (4 March 2012)

John Key: Man of Many Principles (28 Sept 2012)

Labour, Greens, NZ First, & Mana – A Bright Idea with electricity! (10 March 2013)

References

NZ History Online:  Dancing Cossacks political TV ad

NZPA: Splitting up ECNZ expected to cut wholesale power price (16 Dec 1998)

NZPA:  Reforms aimed at business – Luxton (21 April 1999)

Otago Daily Times: Power Prices Set To Soar (12 May 1999)

Otago Daily Times: No case for regulation (24 May 1999)

Otago Daily Times: Lower power prices coming says Bradford (3 June 1999)

Otago Daily Times: Power prices to rise by up to 15.1% (29 June 1999)

Otago Daily Times:  Reforms blamed for hike (13 July 1999)

Scoop: Alliance to hold Winston Peters accountable (8 Oct 1999)

NZ Herald: Peters ‘forgets’ NZ First support for power reforms (13 Aug 2008)

Fairfax: Government to seek inquiry into power price rise  (30 September 2008)

NZ Herald:  Put prices on hold, Brownlee tells power companies (21  May 2009)

NZ Herald: Mighty River directors’ 73pc pay rise realistic – Key (5 April 2013)

Scoop:  Labour-Greens to rip up the book on electricity pricing (18 April 2013)

NZ Herald:  Labour-Greens plan could work, says Vector CEO (19 April 2013)

NZ Herald:  National gobsmacked at Labour idea (19 April 2013)

NZ Herald: Power plan likened to Soviet era (19 April 2013)

NZ Herald: MRP chief slams socialist’ plan (21 April 2013)

TVNZ:  Q+A – Transcript of Steven Joyce interview (21 April 2013)

NZ Herald:  Bernard Hickey: Power barons fail to fool the public this time around (21 April 2013)

Radio NZ: Power prices nearly double since 2000 (21 April 2013)

Other blogs

Kiwiblog: Electricity Prices

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The Politics of Power and a Very Clear Choice – Part Tahi

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new zealand high electricity prices

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Historical Background

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New Zealanders, by and large, are not stupid.

We can recognise a rort when we see it. And in the case of electricity prices, we see it on a regular basis in our power bills and media headlines,

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2008

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Government to seek inquiry into power price rise - 2008

Acknowledgement: Fairfax: Government to seek inquiry into power price rise

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2009

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More profit than power for state-owned energy companies - 2009

Acknowledgement:  NBR – More profit than power for state-owned energy companies

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2010

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High spot prices hint at power price rise - 2010

Acknowledgement: Fairfax Media – High spot prices hint at power price rise

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2011

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Power bills set to rise up to 8pc from March - 2011

Acknowledgement: NZ Herald- Power bills set to rise up to 8pc from March

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2012

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Electricity prices tipped to rise steeply - 2012

Acknowledgement:  Fairfax Media –  Electricity prices tipped to rise steeply

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2013

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Power prices rise by average $120 nationwide - 2013

Acknowledgement:  TVNZ –  Power prices rise by average $120 nationwide

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We all know the facts and figures by now,

None of Bradford’s promises came to fruition and on 27 November 1999, Bradford lost his Rotorua seat to Labour’s Stephanie Chadwick (see: Rotorua – New Zealand electorate).

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A Bold New Plan

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On 18 April, Labour and the Greens announced a bold new policy initiative to reign in escalating power price rises. Called NZ Power, the reform would work thusly,

Key to the proposals is the creation of a central buying and electricity system planning agency, dubbed NZ Power, which would drive down power prices because of its market power and would not be required to make a profit.

It would also be the market regulator.

“It will not just supervise the market, it will be actively involved,” said Labour’s finance spokesman David Parker, a Minister of Energy in the 1999 to 2008 Labour-led administration.

It would tender for new electricity generation, or potentially energy efficiency measures, rather than the current crop of generators competing to identify the next least costly unit of new generation when demand rises.

In some cases, industrial users would be able to contract directly with NZ Power.

Power prices would be set not by reference to the cost of the next new unit of generation, but by average costs that include the anticipated price of new generation. However, there would still be a traded market in wholesale electricity, which could reflect regional variations.

Acknowledgement: Scoop –  Labour-Greens to rip up the book on electricity pricing

This new plan was the confirmation (if any was needed) that National’s grand experiment in privatisation and “competition” in the electricity sector was not working. Only  fools  (mostly those posting on right-wing, pro-National Kiwiblog) could possibly argue that the current system was “succeeding”.

In fact, even as far back as May 2009, National Minister Gerry Brownlee demanded that power generators put price rises on hold. He stated,

There is something fundamentally wrong in the way in which we’re marketing electricity in New Zealand.

Acknowledgement: NZ Herald –  Put prices on hold, Brownlee tells power companies

And even the architect of this ill-conceived “reform”, Max Bradford, was reported in May 1999 in the media as planning to regulate electricity line charges,

Enterprise  and Commerce minister  Max Bradford  is to press ahead with regulations to control electricity line charges, but sees no reason to implement regulation in the competitive end of the market.

Acknowledgement: Otago Daily Times – No case for regulation

So even National ministers reluctantly concede that the electricity sector cannot work in an unregulated “freemarket” model, and is unable  to deliver the ‘golden fruits’ of de-regulation and so-called competition.

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Carping & Criticisms

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After the press conference on 18 April, criticism flew thick and fast from National ministers; right wing bloggers;  pro-National sycophantic elements of the media, and their ideologically-wedded fellow-travellers.

On Steven Joyce’s twitter account,

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Steven Joyce - Tweet - NZ Power - soviet style nationalisation

Source: Twitter/Steven Joyce

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Judith “Crusher” Collins added this bit of gratuitous fantasy-fear mongering,

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Judith Collins - Tweet - NZ Power - soviet style nationalisation

Source: Twitter/IBID

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From Simon Bridges, this little bit of muppetry,

They may want to return to sort of United Soviet Socialist Republic of New Zealand days but National certainly doesn’t.”

Acknowledgement: NZ Herald – Power plan likened to Soviet era

It was  actually the Union of Soviet Socialist Republics, Mr Bridges, not “United” Soviet Socialist Republic. Get your Evil Empires  right, mate.

And anyway, most of New Zealand’s centralised planning occurred during National’s administration, from 1975 to 1984, under the late Robert Muldoon. Remember the price/wage freeze?

Mighty River Power chief executive Doug Heffernan, also called the plan “socialist” (by the way, is that a bad thing?) He declared,

“What you’ve just described is a socialist consumer model.”

Acknowledgement: NZ Herald – MRP chief slams socialist’ plan

To which I would point out to the reader,

  1. Heffernan benefits from a $1.49 million p.a. salary – whilst Mighty River Power keeps raising it’s power prices. So the gentleman has a vested interest in this issue.
  2. In February this year, Heffernan announced that Mighty River Power’s half-yearly profit has quadrupled; prices had risen by 2%; despite demand “being flat”. (see:  Mighty River Power profit quadruples )
  3. Saying that “Mighty River Power would not have made the $1billion investment into geothermal energy that we’ve made in the last five years … The risks would have been too high” - insults our intelligence.  Mighty River Power was built up by the State, with taxpayers’ money.  Heffernan forgets himself; MRP is not a private company.
  4. And anyway,  is it the role of  SOE chief executives to be promoting privatisation?

Steven Joyce added to the “red menace scare”on TVNZ’s Q+A on 21 April,

“By definition, it’s socialism.

“They are not just talking about the price, they’re talking about telling the generators when they can generate, which generating assets they can use, which ones they can introduce to the markets.”

The Minister said the proposed plan would also scare off investors, with evidence of this seen late last week when the market dropped.

“On Thursday and Friday, the market dropped nearly $600 million across three companies because they said, ‘Jeez, we’re not interested in this’.”

Which is rather strange… Joyce, Bridges, Collins, Key, et al, are likening Labour-Green’s plans to “North Korean economics” or “Soviet style socialism”.

But when did the former USSR or the current North Korea ever have a share market or multi-party Parliamentaty democracy?!?!

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hyperbole will sink legislation

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Could it possibly be that National ministers have no intellectual, rational response  to the proposed NZ Power scheme?

Could it be that they must rely on fear-mongering?  Which reminds me of this,

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dancing cossacks - national fear mongering

Acknowledgement: NZ History Online:  Dancing Cossacks political TV ad

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Could it possibly be that National ministers are placing their faith in free market economics – vis-a-vis the partial sale of state powercos – to get prices to drop? (Which, after 14 years is yet to happen for the domestic consumer.)

Could it be that National ministers are… panicking?!

Because as NZ Herald columnist, John Armstrong wrote on 19 April,

“There may be good reasons for the seemingly constant above-inflation hikes in retail prices. But politicians have given up explaining because consumers long ago stopped listening.

All this would suggest there is fertile ground for Labour and the Greens, who yesterday foreshadowed plans to slash power prices by setting up a new agency, NZ Power, to act as a single buyer of wholesale electricity.

National was truly gobsmacked. It accused Labour of “Muldoonism”, “loony tunes” policy making and “North Korean economics”.

National accepts that at the outset there might be lower prices. But it argues the policy would distort price signals that are so vital to matching supply and demand. That could lead to power shortages. The policy would distort and even discourage investment in power generation.”

Acknowledgement: NZ Herald:  National gobsmacked at Labour idea

Gobsmacked” is about right.

And ironically enough, “Muldoonism” was a product of the National Party – not Labour. Hilarious stuff, indeed!

This is nothing less than a full-scale retreat from market-driven political orthodoxy. In effect, Labour has done the unthinkable; it has publicly announced that neo-liberalism and it’s supposed “free” market economics does not, and cannot,  deliver all of society’s needs.

We get a glimpse  of what it must have been like in 1989 when Mikhail Gorbachev sat down with his colleagues in the Soviet Politburo and announced to a stunned meeting,

Comrades, our communist ideology and centralised economic system has failed.”

Mark 18 April 2013 on your calendar as the day that one of our two main Parties (or, two out of our three main Parties, if  Green political support keeps increasing) renounced neo-liberal free market ideology as a failure.

There is now a clear, unequivocal difference between an increasingly  right wing, ideologically-driven  National, and a decidely more-leftist – but  pragmatic – Labour.

And the public now has a clear choice as well, for whom to vote;

Option A (for the Blue Team): maintain the neo-liberal status quo; proceed with privatisation; and hope-like-hell  that Max Bradford’s promises eventually, maybe, one day, will  come true.

Option B (for the Red Team): vote for change; abandon our slavish adherence to neo-liberal dogma; and, as a side-effect, enjoy cheaper power bills.

Continued at: The Politics of Power and a Very Clear Choice – Part Rua

This blogpost was first published on The Daily Blog on 24 April 2013.

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Previous Related Blogposts

History Lesson – Tahi – Electricity Sector “reforms”  (4 March 2012)

John Key: Man of Many Principles (28 Sept 2012)

Labour, Greens, NZ First, & Mana – A Bright Idea with electricity! (10 March 2013)

References

NZ History Online:  Dancing Cossacks political TV ad

NZPA: Splitting up ECNZ expected to cut wholesale power price (16 Dec 1998)

NZPA:  Reforms aimed at business – Luxton (21 April 1999)

Otago Daily Times: Power Prices Set To Soar (12 May 1999)

Otago Daily Times: No case for regulation (24 May 1999)

Otago Daily Times: Lower power prices coming says Bradford (3 June 1999)

Otago Daily Times: Power prices to rise by up to 15.1% (29 June 1999)

Otago Daily Times:  Reforms blamed for hike (13 July 1999)

Scoop: Alliance to hold Winston Peters accountable (8 Oct 1999)

NZ Herald: Peters ‘forgets’ NZ First support for power reforms (13 Aug 2008)

Fairfax: Government to seek inquiry into power price rise  (30 September 2008)

NZ Herald:  Put prices on hold, Brownlee tells power companies (21  May 2009)

NZ Herald: Mighty River directors’ 73pc pay rise realistic – Key (5 April 2013)

Scoop:  Labour-Greens to rip up the book on electricity pricing (18 April 2013)

NZ Herald:  Labour-Greens plan could work, says Vector CEO (19 April 2013)

NZ Herald:  National gobsmacked at Labour idea (19 April 2013)

NZ Herald: Power plan likened to Soviet era (19 April 2013)

NZ Herald: MRP chief slams socialist’ plan (21 April 2013)

TVNZ:  Q+A – Transcript of Steven Joyce interview (21 April 2013)

NZ Herald:  Bernard Hickey: Power barons fail to fool the public this time around (21 April 2013)

Radio NZ: Power prices nearly double since 2000 (21 April 2013)

Other blogs

Kiwiblog: Electricity Prices

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